Hertz needed to raise employees’ grades in customer service. Enclosed: a lesson plan.
By Russ Banham
In late-2007, Hertz had a firm plan to outsource virtually all HR functions to a single provider globally, via a comprehensive, end-to-end engagement. Then, the financial crisis and consequent recession reared up, and Hertz, the world’s leading vehicle renting organization, hit the brakes on most of its plans. The one administrative responsibility it did ultimately shed was employee training.
During the past 18 months, Hertz and outsourcing provider ACS Learning Services have implemented a global learning solutions strategy that provides a consistent framework for training Hertz employees in North America and Europe. Among the company’s goals is enhanced customer satisfaction—a rewarding, reliable, and dependable experience, whether picking up a car in Paris, France, or dropping one off in Paris, Texas. (And, yes, Hertz has offices in each.) Although it decided against a comprehensive, end-to-end HRO solution, Hertz is cruising happily forward with a comprehensive, end-to-end learning solution.
The reasons why become obvious in light of Hertz’s previous learning model, which left a lot to be desired. “It was very dispersed and essentially broken,” acknowledges Maria O’Donoghue, director of global learning and development for Hertz at its Dublin, Ireland-based shared services center. “We had 15 different training organizations globally, multiple authors of training content, multiple curricula, multiple suppliers, and multiple sets of duplicate content. Learning reported to operations in the United States, and to HR in Europe, which was confusing and inefficient. There was also a strong emphasis on instructor-led training, as opposed to Web-based learning. And the trainers only trained people 50 percent of the time—the rest [was] spent performing administrative functions or developing content.”
Add it all up and Hertz’s learning model was inconsistent and costly, making it ripe for an outsourcing solution. “When an organization has disparate training programs across the globe and more suppliers than they need delivering the same content at different price ranges, outsourcing can be an effective response,” says John Higgins, founder and president of consultancy Higgins Learning Group. “It not only offers consistency in training but a consistency in design content, delivery, and management, thereby enhancing the skills of employees in a consistent way across the globe.” (Higgins, who this month starts a regular column on Learning in these pages, was formerly the chief learning officer at BearingPoint and the global lead for learning innovation at Accenture.)
The five-year engagement between Hertz and ACS was struck in July 2008, just as the recession was taking hold. Like many organizations at the time, 92-year-old Hertz sought to get the most out of its 25,000 employees in 147 countries worldwide, who collectively serve more than 30 million car renters annually. From a learning standpoint, it wanted to eliminate waste and redundancy, improve training quality, and leverage best practices. ACS promised to do all of the above, in addition to providing a single point of accountability for its services. “Hertz had a 100 percent classroom-delivery model, with instructors running all over the world teaching classes, and we talked to them about what a transformed learning organization might look like—one that would drive business strategies and be operationally efficient and effective to boot,” says Richard Klingshirn, ACS executive managing director of learning services.
ACS got into the learning process outsourcing business in 2006, following its acquisition of provider Intellinex from Ernst & Young. Intellinex had developed more than 50,000 hours of learning content and curricula for 200 corporate clients and government agencies in North America and Europe, including such companies as Cisco Systems, Canon USA, Ernst & Young, and Turner Construction, giving ACS significant traction. Today, the learning services operation is one of “four towers” making up its human capital management business (the others are its HRO end-to-end offering, employee benefits outsourcing, and Buck Consultants). “Since the acquisition, we’ve grown the learning solutions business from $80 million to an anticipated $120 million this year,” Klingshirn says.
ACS’s broad learning expertise, technology platform (inherited from Intellinex), and geographic footprint were key factors in Hertz’s selection of the provider for the engagement. O’Donoghue says that both companies also had compatible cultures and a similar mindset about how learning would contribute strategically to Hertz’s bottom line. “We wanted to move from the previous model where learning and development was focused primarily on administration delivery to one in which performance enhancement was the goal,” she explains. “ACS really got to understand our organization and our specific needs in the learning space, and were very proactive and responsive in putting forward potential solutions.”
The partners are still in the process of building out the global curricula. At present, ACS is offering classes in the global onboarding process, global new hire management, global manager development, and a global Six Sigma/LEAN curriculum. Some specific classes that ACS provides include Role of the Manager, Setting Manager Expectations, and Giving Performance Feedback. The training is consistent, although it is adjusted appropriately to confront language and cultural differences, what O’Donoghue calls “localized solutions” for the company’s multiple geographies. (She also notes that all Service Level Agreements to date have been met, without any “tweaking.”)
As in many outsourcing engagements, employees from Hertz’s former learning operation are on the provider’s payroll now—45 people re-badged as ACS training personnel. Less than a handful have since left the organization, a “very good attrition rate,” Klingshirn says. Those who stayed on, he adds, “grasped the opportunity as learning professionals to become part of an organization that lives and breathes learning, day in and day out.” Many had 25 years of experience at Hertz, so re-badging allows them to continue to dedicate their learning experience to the company. “Their institutional knowledge also makes our job a lot easier,” Klingshirn observes.
Seven people remain within Hertz’s learning organization, including O’Donoghue. ACS essentially runs learning solutions “soup to nuts” for Hertz, positioning its hosted technology platform to offer flexible, scalable training programs. Consultant Higgins sees this as a plus from a best practices standpoint.” As new learning initiatives come to the fore—bear in mind that ACS has dozens of other clients for whom they have developed content—it becomes easy to scale up to meet this demand,” he explains.
The cost of the outsourced model is a compelling factor in the engagement. As a provider of services to many clients, ACS is able to amortize its labor costs, making the overall cost to buyers far lower than what they previously spent on an internal solution. Another cost benefit is the Web-based nature of the course material. While classroom training also is provided, it is integrated with online courses. “You don’t end up with instructors going around applying concepts that were already learned in the Web-based environment,” Klingshirn explains. “This cuts down on the amount of overall classwork, the time that employees are out of pocket, and the travel expenses of instructors.”
The rubber really meets the road in terms of enhanced customer service—a key strategic goal in the outsourcing solution. “We’re trying to get to a place where all our employees understand the importance of providing the best possible service to our customers, understanding what the drivers for this are, and how we measure it,” O’Donoghue says. “We want employees to realize that there are clear business benefits to having happy customers, which is our business, after all. We want customers to have an experience that will bring them back again and again, in addition to recommending Hertz to family and colleagues. To do that, we must provide a consistent customer experience. Right now we have pockets of excellence and others not so good. We believe that a consistent learning experience will culminate in consistently excellent customer service across the globe.”
Klingshirn agrees: “A better-educated workforce will improve customer service, which leads to more repeat business and more revenue.”
It’s a lot to place on ACS’s shoulders, but O’Donoghue is confident the provider can bear it well. “They understand our strategic goals in different parts of the business and how learning can support it,” she says. “They understand and analyze our needs, design solutions, develop the content, manage and update the curricula, handle all the instruction, and take care of all the administration. Really, it is practically all with ACS.”
As the global director of learning and development, O’Donoghue is the lead of all learning and development, ensuring that training programs are business driven, and Hertz employees are afforded the proper amount of training for their respective jobs. With that comes governance. Toward this end, two organizations have been formed—a Strategic Learning Council, made up of senior members of both companies that meets biannually to discuss strategic objectives and investments and to sign off on the annual business plan; and a Learning Advisory Board, a more tactical organization made up of different layers of management across both companies that meets quarterly. “We’ve learned that a successful outsourcing relationship involves teamwork; it cannot be ‘us and them,’ then nobody wins,” O’Donoghue says, adding that a combination of conference attendance and “extensive reading” have helped her anticipate, and avoid, typical pitfalls. “We want ACS to succeed, and they want Hertz to succeed. And the key to this is communication.”
Higgins agrees that effective governance is vital. “A key challenge for global enterprises in terms of learning solutions is that they are often so geographically and culturally dispersed that it becomes difficult to get the corporate training function aligned with the business units,” he says. “An end-to-end learning solutions provider like ACS with a sound global governance model can help ensure this alignment. They are in a position to manage third-party vendors in different parts of the world, all the while ensuring learning consistency and quality.”